Understanding and Calculating for Monthly PCP Loan Payment

Monthly PCP loan payment is the amount you every month on the PCP deal.


Suppose you check a new deal on the Hyundai i30 Estate worth £17,145. The dealer will offer you an annual interest rate of 11.7% for a loan term of 36 months. In such a case, you will be asked to pay £324.32 each month to settle the PCP deal. This amount is the monthly PCP loan payment.

Monthly PCP loan payment in detail

In a PCP deal, the monthly payment is lower than other car financing options, such as HP. That is because you are not paying for the full value of the car but only for the difference of the car price and its GMFV. Suppose you were to buy the same Hyundai i30 Estate under HP, your monthly payment will be higher at £486.01. However, under HP you will get full ownership of the car at the end of the term. Whereas under PCP your monthly payment has contributed only towards depreciation or wear expenses. And thus, you will have a higher amount to pay in the end.

The amount you pay every month in a PCP deal is affected by a lot of factors. These factors include the car price, the cash deposit, dealer contribution, GMFV offered, and car loan term. For example, if all other things are same between two deals, but the deposit is higher in one deal, then the monthly payment will be lower.

Let's try and understand this with an example of a Kia Sportage Diesel Estate.

Dealer 1 is offering you a car price of £20,672. Cash deposit is £1,000; dealer contribution is £500, GMFV is £11,308, and loan term is 36 months. Annual interest rate is 10.5%. In this case, your monthly PCP payment will be £255.60.

Dealer 2 is asking for a higher price of £21,200. Cash deposit is £2,000 and there is no dealer contribution. Loan term is higher at 48 months, and thus annual interest rate is 13% and the GMFV offered is lower, at say, £10,200. In this case, even with a higher car price, your monthly PCP payment will be lower at £241.45.

All these calculations have been made using our PCP calculator. You can also use the calculator for free to make your own calculations.

How does the monthly PCP loan payment affect you?

The monthly PCP loan amount has a significant impact on both your PCP as well as overall finances. While a smaller monthly payment may make it easier to manage your short-term finances, you may end up paying a lot more in the long term. Before short listing a PCP deal, you need to look at the overall finances and not just the monthly payment amount.